An options trader spends over $20 million betting that corn prices will reach a three-year high

Source: Global Markets Report

An options trader has invested more than $20 million, betting that corn prices will rise to their highest level since 2023. As corn exports reach record highs, U.S. farmers have reduced corn planting acreage during the spring season.

On Wednesday, the Chicago Futures Exchange saw a block trade of 105,000 November $5.50/$6 bull call spreads, corresponding to over 500 million bushels of corn.

Due to intense heatwaves, the growth momentum of U.S. crops has weakened, and July is typically the most critical month for U.S. crop development. With U.S. corn acreage dropping to its lowest level in two years, analysts previously indicated that either a further decline in yield or continued growth in demand could push prices higher.

On Wednesday, December futures prices rose by 2% to $4.8475 per bushel, with a cumulative increase of 11% this month. The most actively traded futures contract last exceeded $5.50 per bushel in July 2023.

If corn prices rise nearly 15% from current levels to $5.50 per bushel, this bet will start to pay off; if prices reach $6 per bushel, the maximum profit could reach approximately $250 million.

The size of this transaction has sparked market speculation that the trader is likely a hedge fund or other large investor, rather than a commercial hedging for end-user demand.